iSoft delays results again

Condition now critical

Software supplier iSoft upset the City yesterday when it announced it would delay reporting its annual results indefinitely, saying it needed more time to sort things out with its bank, and time to hammer out the details of its future contract with the NHS's National Programme for IT.

This is the second delay within a month and has rattled investors. Shares fell a further 10.25 pence yesterday, meaning iSoft has seen almost 90 per cent of its market value wiped from its shares so far this year.

Until last month, iSoft had been booking future software licenses as current revenue. Its decision to stop this practise, and the subsequent re-statement of accounts, has put it at risk of breaching its banking convenants, the FT reports.

Before the revision, its full year pre-tax profit was expected to be between £17m and £22m. Now, analysts expect that figure to be between £3m and £7m.

Ovum analyst Phil Codling told us that the second delay has not inspired any confidence, since the company still hasn't been able to sort out the two key issues facing it: its banking facilities and the future of its contract with the NPfIT.

"I suspect the difficulty is that the two things are interrelated," said Codling. "The ability to get the [banking facilities] is dependent on future contract commitments."

In something of a Catch-22 situation, those contractual committments also depend on the situation with the banks being worked out, he added.

Further, the fact the company is currently bereft of a CEO makes its prospects look particularly bleak, as are its prospects for filling the position unless things improve dramatically.

At the time of its first profit warning in January, iSoft blamed its woes on delays to the NPfIT. Now its main partner in the deal, Accenture, has suggested it will use another supplier if iSoft can't deliver on time. ®